For someone who hates being in debt and wants to become debt-free ASAP, going another ~90K into debt may sound crazy (yes, our house is about $90,000 – and it’s not a shack. We’re just buying in Middle-of-Nowhere, Ohio). But for my husband and me, homeownership just makes sense right now, especially at that price point. My justification below is certainly an oversimplification and I could spend all day talking about interest rates and amount borrowed vs. amount actually paid (which is coming up in a future student loan post), but I don’t want to hurt my brain too much [or bore you to death] by getting into all that right now, so I’m going to stick with simple for the moment.
The Price is Right
Our mortgage payment will be around $300 less per month than our current rent – including tax, homeowner’s insurance, and mortgage insurance (which we have to pay because we’re putting less than 20% down, and we will pay until we’ve paid down 20% of the mortgage). The monthly payment will be about $630/month. Our current rent is $920. That $300 we’re saving in rent is an extra $300 that can go toward our student loans. Now, we could rent for about the same monthly cost as our mortgage in the town that we’re buying (Middle-of-Nowhere, Ohio, remember), but renting in MoN, Ohio isn’t something we’re interested in when we can get our own home, a yard, and a lot more space for the same price.
We Plan on Living in this Home for Several Years
If we were just looking for a place to live for a year or two, I’d totally be all about renting. We’re planning on living in this home for at least the next 6-8 years. It gives us plenty of room to grow our family during that time (see also: adopt more dogs) without having to worry about running out of space and moving again in the near future. We want a space that’s ours; with projects we can do, a yard for the dog(s) to run around, room for a small garden. We just wouldn’t be able to find that in a rental. I’m excited to put some sweat-equity into a place of my own.
There is the *Potential* for Future Rental Income
We fully intend on paying this home loan off before buying our NEXT home, and are considering the potential to rent this one out in the future. MoN, Ohio is a college town with no shortage of potential tenants. I know that being a landlord has its pros and cons, and we’ll cross that bridge when we get there and think about it more years down the road, but the idea of making some extra money once we pay off the mortgage is pretty appealing.
This is Part of Our Bigger Plan
From here, we are definitely still trying to pay off our debt as quickly as possible. Once we get back into a normal financial routine after the initial home buying expenses (down payment, inspection, etc., etc.), all of our extra money will go back toward our student loans. Yes, we’re adding more debt for the short-term, but with a plan to pay it all off in under 10 years and the perk that this allows us to put more money toward student loans in the short-term, this is the best long-term investment for us right now.